Market Roundup
- CNY market to-do at open on incorrect PBOC rate cut alert.
- EU Juncker – No months to meditate over British EU withdrawal, next UK PM if from leave camp should trigger EU exit negotiations upon election.
- EU Tusk – Orderly exit of UK in everyone’s interests, must let dust settle but exit talks must start as soon as possible – Reuters.
- Japan PM Abe – BoJ to ensure market liquidity-functioning, FinMin paying utmost attention to FX, financial market moves, risks remain, to mobilize all available policy measures to support growth – Reuters.
- BoJ Gov Kuroda – Will provide funds to market as needed, don’t see any problems in Japanese banks’ foreign currency funding – Reuters.
- FinMin Aso – Market appears to be stabilizing – Reuters.
- Japan May retail sales -1.9% y/y, -1.6% eyed, down last three months, recovery outlook gloomy.
- Japan May crude imports +11.3% y/y, LNG -4.0%, thermal coal +44%.
- Australia May HIA new home sales -4.4% m/m, April -4.7%, detached homes -6.7% but apartments +4.9% in May.
- RBNZ – Uncertainties but economy expanding, some financial stability risk, additional macroprudential policy options being explored, ease possible.
- New Zealand Q1 unemployment revised down to 5.2%, prelim 5.7%, changes to series.
Economic Data Ahead
- (0300 ET/0700 GMT) Spain Jun HICP – flash, -1.0% y/y eyed; last -1.1%.
- (0330 ET/0730 GMT) Sweden May household lending; last +7.7% y/y.
- (0400 ET/0800 GMT) Norway May retail sales ex-autos, +0.5% m/m eyed; last unch.
- (0430 ET/0830 GMT) Great Britain May money supply M4; last -0.1%.
- (0430 ET/0830 GMT) Great Britain May consumer credit, GBP1.4 bln eyed; last GBP1.29 bln.
- (0430 ET/0830 GMT) Great Britain May mortgage approvals, 65.25k eyed; last 66.25k.
- (0430 ET/0830 GMT) Great Britain May mortgage lending, GBP2.2 bln eyed; last GBP280 mln.
- (0500 ET/0900 GMT) Eurozone Jun business climate index, 0.26 eyed; last 0.26.
- (0500 ET/0900 GMT) Eurozone Jun industrial sentiment index, -3.4 eyed; last -3.6.
- (0500 ET/0900 GMT) Eurozone Jun economic sentiment index, 104.7 eyed; last 104.7.
- (0500 ET/0900 GMT) Eurozone Jun services sentiment index, 11.0 eyed; last 11.3.
- (0500 ET/0900 GMT) Eurozone Jun consumer confidence index – final, -7.3 eyed; last -7.0.
- (0530 ET/0930 GMT) Belgium Jun CPI; last +0.32% m/m, +2.2% y/y.
- (0800 ET/1200 GMT) Germany Jun HICP – flash, +0.1% m/m, +0.2% y/y eyed; last +0.4%, unch.
- (0830 ET/1230 GMT) United States May personal income, +0.3% m/m eyed; last +0.4%.
- (0830 ET/1230 GMT) United States May personal consumption, +0.4% m/m sa eyed; last +1.0% sa, +0.6% nsa.
- (0830 ET/1230 GMT) United States May core PCE, +0.2% m/m eyed; last +0.2% m/m, +1.6% y/y.
- (1000 ET/1400 GMT) United States May pending home sales, -1.1% m/m eyed; last +5.1%, index 116.3.
- (1300 ET/1700 GMT) United States May Dallas Fed PCE; last +2.5%.
Key Events Ahead
- N/A ECB Central Bank Forum in Sintra, Portugal (final day).
- N/A Sweden SEK5 and 10 bln 82 and 110-day treasury bill auctions.
- (0530 ET/0930 GMT) ECB 91-day refi, E10 bln allotment eyed, E10.25 bln maturing.
FX Beat
USD: The dollar index, against a basket of currencies edged up to 96.14, hovering towards a peak of 96.71 touched last week.
EUR/USD: The euro trades flat at 1.1066, off its 3 1/2-month low of 1.0911 touched on Friday. The major fails to break above 1.1100 level as the US dollar strengthened against most of its major peers. Data released yesterday, showed that U.S. economy grew by 1.1 percent for the first quarter, while consumer confidence for the month of June rose 98.0 versus consensus 93.3. and previous 92.4. Developments surrounding the Brexit issue continue to weigh on the pair, with focus on the second day of the EU Summit. Markets will closely watch eurozone's economic sentiment, industrial and consumer confidence data ahead of U.S core PCE index, personal spending and pending home sales data for further cues. Immediate resistance is located at 1.1100 level, break above will take the pair till 1.1124. On the lower side, support is seen at 1.1010 (Previous Session Low).
USD/JPY: The Japanese yen edged up against the dollar despite improving risk conditions persisting in the markets. The greenback trades 0.4 percent lower at 102.35, but away from its 2-1/2-year low of 99.00 touched on Friday after the outcome of the Britain referendum. Japanese authorities have warned that they could intervene in the currency market to halt the yen's rise. Data released earlier showed that Japan's retails trade for the month of May declined -1.9 percent y/y against forecast -1.6 percent and prior -0.9 percent. Immediate support is located at 101.56 (Previous Session Low), while resistance is located at 103 level, break above will take the pair till 103.67.
GBP/USD: Sterling eased as concerns over banks, growth and investment continue to hamper market sentiments following Britain's vote to leave the European Union last week. The major trade flat at 1.3334, within the sight of 1.3119 touched on Monday. Markets attention will remain on the EU Summit for fresh Brexit-related developments; ahead of series of economic data from the U.S. Immediate support is seen at 1.3200 level, break below could drag the pair near 31-year low. On the higher side, resistance is located at 1.3484. Against the euro, the pound was trading lower at 83.00 pence.
AUD/USD: The Australian dollar gained as the extended risk-on rally in the equities continues to strengthen market sentiment. The Aussie trades higher at 0.7393, having touched an early high of 0.7423, though it remained well short of the recent 0.7617 peak. The major's recovery was supported by better new homes sales data for the month of May, which came in at -4.4 percent as compared to previous -4.7 percent. The movement in the pair will be driven by broader market sentiment ahead of U.S. economic releases due later in the day. Immediate resistance is located at 0.7433 (10-DMA), break above will take it till 0.7451. On the lower side, support is seen at 0.7324 (Previous Session Low).
NZD/USD: The New Zealand dollar gained after the Reserve Bank of New Zealand released its annual statement of intent, in which it reiterated that it still has room to cut rates if required. The Kiwi rose 0.4 percent to 0.7070, after going as high as 0.7096, just short of 0.7100 level. The major continues to rise, support by rallying oil prices, which rose for the second consecutive session. Immediate resistance is located at 0.7100 level, break above could take the pair till 0.7122. On the lower side, support is seen at 0.7012.
Equities Recap
Asian share advanced as market concerns over the Brexit vote began to ease, while investors wagered central banks would inject more stimulus measures.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 percent.
Tokyo's Nikkei gained 1.59 pct at 15,566.83, Australia's S&P/ASX 200 index edged up 0.82 pct at 5,145.30 points and Seoul shares added 1.18 pct.
Shanghai composite index rose 0.4 pct at 2,923.18 points and CSI300 index climbed 0.1 pct at 3,141.54 points.
Hong Kong’s Hang Seng was trading 0.8 percent higher at 20,329.60 points. Taiwan stocks nudged up 1.0 pct at 8,586.56 points.
Commodities Recap
Oil rose for the second consecutive session as traders turned back to commodities after the initial shock of Brexit and as a looming strike in Norway and crisis in Venezuela threatened to reduce supply. International Brent crude oil was trading at $48.81 per barrel at 0434 GMT, up 0.1 percents. U.S. West Texas Intermediate crude was up 30 cents at $48.15 a barrel.
Gold gained after declining about a percent in the previous session, as concerns of uncertainty across financial markets after Britain voted to exit the European Union, strengthened the safe-haven appeal. Spot gold rose 0.5 percent to $1,318.70 an ounce by 0438 GMT, while U.S. gold was up 0.1 percent at $1,318.80.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.4630 percent up by 0.002 bps, while 5-year was 0.012 bps up at 1.0126 percent.
The Australian government bonds slumped as investors switched to risk-on mode after two days of mayhem. The yield on the benchmark 10-year Treasury note gained more than 2-1/2 basis points to 2.022 percent and the yield on short-term 2-year note jumped 4 basis points to 1.614 percent.
New Zealand government bonds eased, sending yields 1 basis point higher at the long end of the curve.
Canadian government bond prices were flat to slightly lower across the maturity curve as the rally in safe-haven assets halted. The 2-year price declined1.5 Canadian cents to yield 0.496 percent and the benchmark 10-year was unchanged to yield 1.079 percent.
